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FS KKR Capital (FSK) Q2 Earnings Beat Despite Higher Expenses

·3 min read

FS KKR Capital Corp.’s FSK second-quarter 2022 adjusted net investment income (NII) per share of 67 cents surpassed the Zacks Consensus Estimate of 65 cents. This compared unfavorably with the prior-year quarter’s 74 cents.

Results were aided by a substantial rise in total investment income. Also, portfolio activity was decent in the quarter. However, higher expenses hurt FSK’s results to some extent.

NII (GAAP basis) was $203 million, up 75% from the prior-year quarter.

Total Investment Income & Expenses Jump

Total investment income was $379 million, surging 84% from the year-ago quarter. The top line surpassed the Zacks Consensus Estimate of $378.8 million.

Total operating expenses increased significantly from $90 million to $191 million. All cost components witnessed a rise. Moreover, the company recorded a subordinated income incentive fee of $37 million in the reported quarter.

Total Portfolio Value & Balance Sheet Decent

The fair value of FS KKR Capital’s total investment portfolio was $16.2 billion as of Jun 30, 2022.

As of Jun 30, 2022, the company’s net asset value was $26.41 per share compared with $26.84 on Jun 30, 2021.
 
The company had $17.2 billion in total assets and $7.5 billion in total stockholders’ equity at the end of the second quarter. As of Jun 30, 2022, 51% of FSK’s roughly $9.3 billion of total debt was in unsecured debt and 49% in secured debt.

Our Take

Decent origination volumes are expected to support FS KKR Capital’s profitability. However, a tough operating backdrop remains a headwind.

FS KKR Capital Corp. Price, Consensus and EPS Surprise

FS KKR Capital Corp. Price, Consensus and EPS Surprise
FS KKR Capital Corp. Price, Consensus and EPS Surprise

FS KKR Capital Corp. price-consensus-eps-surprise-chart | FS KKR Capital Corp. Quote

Currently, FSK carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Finance Companies

Hercules Capital Inc.’s HTGC second-quarter 2022 net investment income of 32 cents per share missed the Zacks Consensus Estimate by a penny. The bottom line matched the year-ago quarter figure.

HTGC’s results were primarily hurt by a rise in expenses. However, an improvement in total investment income was a positive. Also, the balance sheet position remained strong and new commitments were robust.

Ares Capital Corporation’s ARCC second-quarter 2022 net investment income of 52 cents per share surpassed the Zacks Consensus Estimate of 43 cents. The bottom line reflected a rise of 33.3% from the prior-year quarter.

ARCC’s results were aided by an increase in total investment income and lower expenses. The portfolio activity remained solid in the quarter.


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Ares Capital Corporation (ARCC) : Free Stock Analysis Report
 
Hercules Capital, Inc. (HTGC) : Free Stock Analysis Report
 
FS KKR Capital Corp. (FSK) : Free Stock Analysis Report
 
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